Official terminates WellCare contract

Friday brought a second blow to Gov. Terry Branstad's plan to move its $5 billion Medicaid program to managed care. A state official said the bid from WellCare of Iowa - one the four companies awarded contracts - should be 'disqualified and the subsequent contract ...

terminated.”

Branstad announced plans earlier this year to transition Iowa's $5 billion Medicaid system to four out-of-state, private care companies - Amerigroup Iowa, AmeriHealth Caritas Iowa, UnitedHealthcare Plan of the River Valley and WellCare - starting Jan. 1.

However, on Thursday, the Centers for Medicare and Medicaid Services - the federal agency that must approve the transition - delayed the transition until March 1, citing an inadequate provider network.

In October, three companies who were passed over for managed-care contracts argued the bidding system was 'flawed” and 'biased,” pushing for the procurement process to be undone and replaced with a fairer scoring system.

Administrative law judge Christina Scase did not suggest the state needed to go that far, but did say WellCare's contract should be reversed. She cited the company's failure to disclose a corporate integrity agreement that would have included information on $137.5 million in fines to resolve false claim litigation.

Then on Friday afternoon, Janet Phipps, director of the state Department of Administrative Services who was tasked by Branstad to review Scase's recommendation, agreed.

'WellCare failed to disclose highly relevant information both in its initial response” and 'in its ‘clarifying' answer,” she wrote in her decision. 'In doing so, WellCare not only violated the terms of the (request for proposal) but also deprived the agency decision-makers - both the evaluation committee and Director (Charles) Palmer - of the opportunity to fully exercise their discretion in determining which bid proposals would provide ‘the greatest benefit to the agency.'”

Lauralie Rubel, state president of WellCare of Iowa, said in an email to The Gazette that the decision did not accurately reflect the facts, adding WellCare 'intends to use every avenue available within the legal system to correct this erroneous outcome.”

She added that the company plans to immediately seek an injunction 'to allow WellCare of Iowa to continue its participation in the program while this matter is appealed in a court of law.”

In a statement, Branstad said Friday afternoon that 'the final decision ...

confirms that the Department of Human Services conducted a ‘thorough and methodical' procurement,” referring to Phipps's decisions to adopt the section of Scase's proposed decision, which found the scoring and evaluation methodology to be fair.

'Our focus continues to be on Iowa Medicaid patients' health and the providers who make their care possible,” he said, adding Iowa will continue building toward a March 1 kickoff.

Earlier in December, DHS told The Gazette that if the state decides to toss out WellCare's contract, Iowans put on a WellCare plan will be reassigned to one of the three remaining managed-care organizations.